In Canada, the primary legislation governing anti-money laundering (AML) efforts is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
The original version, enacted in 2000, required financial institutions and other entities to implement measures to address the rising concerns about money laundering.
It mandated reporting requirements for certain financial transactions and established the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) as the central agency for financial intelligence. After the September 11 attacks, the PCMLTFA was amended to include measures against terrorist financing. This expansion contained more stringent reporting requirements and greater powers for FINTRAC to share information with law enforcement agencies.
There have been subsequent enhancements (2006-2010) in which some amendments increased the scope of the act to include sectors such as real estate, dealers in precious metals and stones, and money services businesses. These amendments also introduced stricter Know Your Client (KYC) and record-keeping requirements.
In 2014, the PCMLTFA was updated to include more robust compliance and reporting obligations, particularly for politically exposed persons (PEPs) and heads of international organizations (HIOs).
The most recent revisions (2019-2021) help to address evolving threats and stay current with international standards. Further amendments were made to enhance the regulatory framework which included updating reporting thresholds, expanding definitions of suspicious transactions, and increasing oversight of virtual currencies and fintech.
Reporting Requirements: Entities must report suspicious transactions, large cash transactions (over CAD 10,000), electronic funds transfers (EFTs), and a terrorist property report to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Know Your Client (KYC) Procedures: Entities must verify the identity of clients and maintain records of this verification. This includes enhanced due diligence for higher-risk clients.
Record-Keeping: Entities must retain records of transactions, client identification, and other relevant documents for at least five years.
Information Sharing: FINTRAC can share information with domestic and international law enforcement and regulatory agencies to combat money laundering and terrorist financing.
Compliance Programs: Entities must develop and maintain an AML compliance program, which includes appointing a compliance officer, conducting regular training, and performing internal audits.
The main elements of a compliance program are:
Designate a person responsible for implementing the AML/ATF compliance program.
Importance:
Develop and apply written compliance policies and procedures that are kept up to date and, in the case of an entity, are approved by a senior officer. This includes KYC, record-keeping, reporting, and ongoing monitoring requirements.
Importance:
Example: A bank operating internationally may have different risk levels based on the countries it deals with. Transactions involving countries known for weak AML controls or high corruption levels would be flagged for increased scrutiny.
The risk assessment helps your business to assess and document the risk of a money laundering offence or a terrorist financing offence (ML/TF) occurring in the course of your activities.
Importance:
Example: A bank operating internationally may have different risk levels based on the countries it deals with. Transactions involving countries known for weak AML controls or high corruption levels would be flagged for increased scrutiny.
Develop and maintain a written, ongoing compliance training program for your employees, agents or mandataries, or other authorized persons.
Institute and document a plan for the ongoing compliance training program and deliver it faithfully.
Importance:
Institute and document a plan for a review of the compliance program for the purpose of testing its effectiveness and carry out this review every two years, at a minimum.
Importance:
One the areas most often cited as being deficient during a FINTRAC examination is training. Best practice dictates that an organization should roll out annual training to all employees.
In addition, supplementary training should be provided throughout the year. This the greatest way of to keep AML/ATF issues top of mind for your employees while fulfilling FINTRAC’s guidance for ongoing training. When it comes to the regulator, your organization should not be looking to be the squeaky wheel needing subsequent follow-up and review.
AML compliance isn’t just about technology – it’s about people. Here’s why regular, comprehensive anti-money laundering training for your employees at all levels is crucial:
Frontline Defense: Your tellers, customer service reps, and loan officers are often the first to interact with potential bad actors. Training them to spot red flags like unusual transaction patterns, reluctance to provide information, or customers with high-risk profiles is your first line of defense.
Beyond the Basics: Anti-money laundering training shouldn’t be a one-and-done activity. Ongoing training keeps your employees updated on evolving money laundering schemes and regulatory changes. It also reinforces the message that AML is a core part of their responsibility.
Topics to Cover: A comprehensive anti-money laundering training program goes beyond definitions. It should include:
Tamlo’s anti-money laundering training aren’t just about compliance but about giving you peace of mind. Here’s what our solutions can do:
Lower your risk: You know that fines for AML violations can becrippling. By automating key compliance processes and improving detection accuracy, you can reduce the likelihood of those costly penalties.
Streamline and save: Time is money. Tamlo’s solutions make AML processes more efficient, freeing up your valuable staff and cutting down on manual labor costs.
Detect more, miss less: With our training, you can educate your employees with training that is engaging and memorable. Your employees will be provided with practical know-how so that they will be adept at spotting suspicious activity patterns that could save the day – and your reputation.
Reputation is everything: No financial institution wants to be associated with money laundering or terrorist financing. Our proactive training can help you confidently tell clients and regulators that you take AML seriously.
The AML landscape is constantly changing. Regulations evolve, and criminals find new tactics. You need a partner to help you keep up. Tamlo offers more than just training. We have a team of subject matter experts who are constantly monitoring and assessing how to adapt our training in order to address the latest threats so that you can identify and manage them.
Ready to strengthen your AML defenses? Book a demo or contact us for a personalized consultation. Let’s protect your institution together!
